Real Estate Talk:
Buying a condo
Rules and formalities to follow when purchasing a divided or undivided condominium
By Joseph Marovitch
Updated February 8, 2024
I sold the home of a wonderful older couple who had lived in the same house for many years. Their children grew up in the house and moved out a while back. There were many memories in the house, however, the wife did not want to maintain the property now that the kids were gone. The husband did not want to move and was very rigid in his ways.
Nonetheless, he agreed with his wife, and they requested I find a condominium with two bedrooms, two bathrooms, two garages, and all the amenities such as a doorman, 24-hour security, pool, gym, and an elevator in a more modern construction.
We only had a month to find a new location since the new owners would be taking possession in thirty days and paid a premium for the option to acquire the house sooner.
A condo can be described as shared living in the same building. The condo can be a duplex, fourplex, or a twenty-unit plus multi-plex. There are two types of condominiums, divided and undivided.
Shortly thereafter, we found a prestigious property located in a well-maintained building constructed in 1987 with all the services requested. The grounds had a stunning garden with a fountain and places to sit. The condo had beautifully stained hardwood floors, marble countertops, and excellent views. We purchased the property and my client moved.
A few months later, the husband called me to say thanks. He told me their new home was beautiful and much easier to maintain. There was no grass to cut, snow to remove and no stairs to navigate. All needs were taken care of by the doorman, security, and administration. The couple were able to leave their home and travel with no worries.
Their reason for purchasing a condo is one of many. For other buyers, a condo is a more affordable option these days than a single home. For others, it can be an investment.
A condo can be described as shared living in the same building. The condo can be a duplex, fourplex, or a twenty-unit plus multi-plex. There are two types of condominiums, divided and undivided.
A divided condo is the preference of most buyers. A divided condo is a building in which the owner owns the unit they are living in. There are shared expenses such as maintenance of common areas, insurance for the building, and any amenities such as a doorman, pool, or gym. However, since the unit belongs to the owner, if financed by a financial institution, the owner can have their own mortgage and place a down payment of as little as 5%.
If the condo is undivided, this means each owner owns a share of the building and not their own unit. Few banks are willing to finance an undivided condo and those that do require the buyer to place a minimum of 20% as a down payment. The advantages of an undivided condo are they tend to be less expensive and if the owners ever do decide to divide the units, the value increases significantly.
‘A divided condo is the preference of most buyers. A divided condo is a building in which the owner owns the unit they are living in.’
Buyers have many options to choose from. However, they can narrow their choice with several of their own criteria and three general rules.
After deciding how many bedrooms and bathrooms are required along with the number of square feet, parking and location needed, the rules to follow are:
- Choose a condo that is built by a developer who has been in the business for some time and has a proven track record for using good materials and delivering on time.
. - Choose a location that is in demand and easy to sell later. Griffintown, by the canal, by the Atwater market, Westmount, NDG, and the Golden Square Mile are all good locations. Areas that are developing with new daycares, shopping centres, restaurants and boutiques are great.
. - Do not over-pay for a condo. Purchase at market value or below. Overpaying for a condo and especially a new construction, with taxes on top of the purchase price, will be very difficult to recoup when you sell unless you keep the condo for a long period. As condos are usually part of the “circle of life”, that is you sell them as soon as you get married or have children, you most likely will not keep the condo long enough to profit if you overpaid.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Next article: Always consider resale when purchasing
State Of The Market
Bank of Canada interest rate: 5 %
Canadian prime rate: 7.2%
Canada inflation today: 3.4 %
There is optimism in the air due to indications of falling interest rates. According to the Quebec Professional Association of Real Estate Brokers (QPAREB), Montreal home sales rose by 18% and so did sale prices in January. It should be kept in mind that the occurrence of recent rising prices and sales are based on market expectation that interest rates will decrease. This optimism is in favour of sellers.
‘We need a delicate balance between lower inflation, lower interest rates and a healthy, consistent economy.’
For buyers, there is still uncertainty since the economy continues to lag. Rates in some institutions may be lower for the moment but the economy requires consistency and forward movement. This means rates must remain the same or lower for a good period of time and the economy must pick up the pace. The problem is a catch-22. If the economy picks up, inflation rises and so do rates. If the economy continues to lag, as is, or at a slower pace, inflation decreases, rates decrease and household income decreases.
We need a delicate balance between lower inflation, lower interest rates and a healthy, consistent economy. Some financial institutions are offering lower rates between 5.9% uninsured and 6.55% insured but they are mainly second-tier banks. If you can get one of these rates, take it, however, be wary of the terms of the mortgage.
Have a great week!
Let’s not forget that people with cancer are vulnerable too!
You are invited to keep giving to the following organizations since it’s now more important than ever to support cancer research! Click on the logos below to find out how:
Other articles by Joseph Marovitch
Other recent articles
Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep-away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or josephmarovitch@gmail.com
Name top and best 3 developers!
There are many good developers. I would recommend, upon finding a condo, research the developer to see how long they have been in business in Montreal, if they deliver on time, use proper material and generally have a good reputation. A real estate broker or evaluator should perform a comparative market analysis to insure you do not overpay as well.
Excellent piece as usual by Joseph. If I may, I’d like to add this from Oprion Consommateurs: https://option-consommateurs.org/en/buying-coownership-property-broker-what-you-need-to-know/